Odd-lot Index in Trading




What is an odd lot trading index? Odd-lot index is a ratio of odd-lot sales to purchases. In stock trading any purchase or sale of less than 100 shares is considered an odd-lot. The ratio of 2.5 is interpreted as a signal of a rising market. The odd-lot investor is considered to be an amateur and guilty of bad timing. Hence, the profits can be made by acting contrary to odd-lot trading patterns.

The short sale ratio is calculated by dividing the number of borrowed shares by theirdaily volume of sales. For example, if three hundred million shares were borrowed and their daily volume equaled 200 million, the ratio would be 1.5. On the other hand if only 100 million shares were borrowed, the ratio would equal 0.5. Generally, the ratio of 1.5 and higher is interpreted positively, i.e. a market rise is expected. The ratio of 1.5 to 1.0 is interpreted as mildly bullish and the ratio of under 1.0 is interpreted as a possibility of a market decline.

The Stock Indexes, the Most Active Stock, The New Highs and New Lows Tables are frequently analyzed to predict market trends.
The Dow Jones Industrial average is the most popular stock index and reflects an average price of the 30 biggest industrial firms in the USA. The others are:
The Standard and Poor’s 500 Index is an average price of the 500 biggest corporations in the USA,
The New York Composite Index reflects the average price of all stocks listed on the New York Stock Exchange and
The Value Line represents an average of approximately 1700 stocks.

The increase in these indexes does not guarantee an automatic increase in the price of your shares and vice versa. These indexes measure the general price movement of various exchanges.
A stock table of the most active issues is composed of companies’ names whose shares traded in large quantities the day (or week, if weekly) just passed. This table fascinates investors who seek a golden key to unlock stock market success. The most active stock list does not necessarily contain the most popular names. For example, this list contains the names of stocks which may trade actively because of dividend capture programs, etc. The New High and the New Low Tables list companies whose shares reached the highest or the lowest quotations in the last 52 weeks.

Related Posts

Small Risk of Loss in an Investment?

What are the Investments with Low Risk? Financial instruments with a small risk are bonds and mutual funds which invest in bonds. Small Risk of Loss in an Investment? Market risk exists with interest rate fluctuations and potential income usually exceeds the level of inflation by 2 to 4 %. The duration of these investments […]

Read More

What are the Types of Investment Organizations?

What are the Types of Investment Organizations? Below I describe types of American business organizations, types of investment companies, and some of the most important financial instruments offered by the investment banking firms. There are two basic types of American business organizations: corporations and partnerships. A thorough knowledge of both types of organizations is helpful […]

Read More